GM ordered to stop selling unrepaired 'certified' used cars after FTC probe
The Federal Trade Commission has imposed a 20-year consent order on General Motors and two major US dealer groups after they sold certified pre-owned vehicles with unrepaired safety recalls.
General Motors has agreed to a 20-year consent order with the US Federal Trade Commission after the regulator found GM and two of the country’s largest dealer groups had sold “certified” used cars with unresolved safety recalls. The FTC’s action, announced in January 2016, followed complaints that GM, Jim Koons Management and Lithia Motors had advertised and sold vehicles as safe despite open and unrepaired defects, some of which were linked to fatal accidents.
The FTC’s investigation focused on GM’s “Certified Pre-Owned” vehicle programme, which was promoted as offering cars inspected to a 172-point standard by factory-trained technicians. GM’s marketing claimed these checks ensured every vehicle’s engine, chassis and body were in excellent condition. In practice, the FTC said, some cars were sold as certified despite outstanding recalls for critical safety issues including defective ignition switches, airbag failures, braking problems and power steering faults.
Jim Koons Management and Lithia Motors, both major US dealer groups, were also cited. Koons, which operates 15 dealerships, advertised similar inspection guarantees for its certified cars, while Lithia, with over 100 stores, promoted a 160-point inspection. The FTC found both groups had sold vehicles with open recalls, including ignition switch defects, alternator faults with fire risk, and rear suspension problems.
What the FTC order requires
Under the consent order, GM, Koons and Lithia are prohibited from claiming that used vehicles are safe or thoroughly inspected if they have unresolved safety recalls, unless they clearly disclose the existence of those recalls at the point of sale and in advertising. The companies must also contact customers who purchased affected vehicles as far back as 2013 to inform them of any open recalls.
The consent order does not require the companies to pay fines immediately, but any future breach could trigger substantial penalties. The FTC’s action is intended to prevent misleading safety claims and ensure buyers are informed about unresolved recalls before purchasing a certified used car.
Impact on buyers and the used car market
Buyers who relied on the certified status of GM’s used cars may have been unaware of serious defects. The FTC’s order forces greater transparency, requiring dealers to repair safety recalls or disclose them clearly to potential customers. The move is likely to affect how certified pre-owned programmes are marketed and managed across the US, with implications for other manufacturers and dealer groups offering similar schemes.
The case highlighted the gap between manufacturer and dealer marketing and the real-world safety status of used vehicles. It also follows a series of high-profile safety recalls, including GM’s ignition switch defect, which has been linked to hundreds of deaths and injuries. For more on the legal fallout from GM’s ignition switch crisis, seeGM Faces Two Key Legal Tests Over Ignition Switch Defect.
